Beliefs that Entertain

Economic research on entertainment is scant despite its large share of time use. We apply insights from behavioral economic theory to analyze the role of beliefs on players’ engagement with video games. Using detailed minute-by-minute data on 2.8 million matches from the popular video game League of Legends, we estimate a model of player engagement as a function of the path of their beliefs during the match. Consistent with reference-dependence and loss aversion but contrary to some models of anticipatory utility, lagging behind the opponent throughout the match increases engagement. This is true whether the player wins or loses, but the effect is substantially larger for losers. Players are more engaged when held in suspense throughout the match and dislike when surprises are actually realized. Winners prefer surprises to be smoothed out throughout the match, whereas losers prefer surprises clumped. We also find evidence in favor of flow theory: players engage more when they face a challenge but not when the match is too hard or too easy. We then leverage our estimated model to inform game design. We find that optimizing the information revelation process could substantially increase player engagement: the average effect is 43% as large as the effect of making a losing player feel like a winner.